Correlation Between Dong A and Fecon Mining
Can any of the company-specific risk be diversified away by investing in both Dong A and Fecon Mining at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Dong A and Fecon Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dong A Hotel and Fecon Mining JSC, you can compare the effects of market volatilities on Dong A and Fecon Mining and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Dong A with a short position of Fecon Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dong A and Fecon Mining.
Diversification Opportunities for Dong A and Fecon Mining
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dong and Fecon is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Dong A Hotel and Fecon Mining JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fecon Mining JSC and Dong A is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Dong A Hotel are associated (or correlated) with Fecon Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fecon Mining JSC has no effect on the direction of Dong A i.e., Dong A and Fecon Mining go up and down completely randomly.
Pair Corralation between Dong A and Fecon Mining
Assuming the 90 days trading horizon Dong A Hotel is expected to generate 0.26 times more return on investment than Fecon Mining. However, Dong A Hotel is 3.85 times less risky than Fecon Mining. It trades about -0.12 of its potential returns per unit of risk. Fecon Mining JSC is currently generating about -0.28 per unit of risk. If you would invest 308,000 in Dong A Hotel on September 1, 2024 and sell it today you would lose (3,000) from holding Dong A Hotel or give up 0.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dong A Hotel vs. Fecon Mining JSC
Performance |
| Timeline |
| Dong A Hotel |
| Fecon Mining JSC |
Dong A and Fecon Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dong A and Fecon Mining
The main advantage of trading using opposite Dong A and Fecon Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dong A position performs unexpectedly, Fecon Mining can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Fecon Mining will offset losses from the drop in Fecon Mining's long position.| Dong A vs. Saigon Telecommunication Technologies | Dong A vs. 577 Investment Corp | Dong A vs. Construction And Investment | Dong A vs. Vu Dang Investment |
| Fecon Mining vs. Vien Dong Investment | Fecon Mining vs. CMC Investment JSC | Fecon Mining vs. Dong A Hotel | Fecon Mining vs. Development Investment Construction |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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